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When we hear the word "renewable energy" we immediately think of solar energy. As our world uses more and more renewable energy sources, solar and wind power have become familiar symbols. The renewable energy market is already worth about $1 trillion and shows no signs of stopping. A major reason for this huge growth is the increasing availability of cost-effective and long-term renewable energy. For example, solar power is reaching low prices of around $30 to $50 per megawatt, compared to grid power, which is still around $150 to $160 per MWh.
While the initial costs of solar power and the threat of unknown fuel sources have baffled many consumers, countless companies have begun developing new solutions to make it easier for consumers to integrate with renewable energy. Especially as investors pay more attention to environmental, social and governance ( ESG ) issues, there is a need to understand the companies that are leading the next success story. As giants like Tesla (NASDAQ: TSLA ) and NextEra Energy (NYSE: NEE ) begin to move into the renewable energy space, in this article we want to highlight three other hidden gems that could dominate next. Leaders in this industry. Space, solar energy.
Enphase Energy (ENPH)
Source: T. Schneider/Shutterstock.com
Enphase Energy (NASDAQ: ENPH ) is a global leader in revolutionary microinverter technologies. With 765 patents worldwide and a customer base in over 145 countries, Enphase Energy is a competitive leader in solar innovation. In fact, analysts at Yahoo Finance expect it to trade at $116.09 for the year.
Recently, on November 16, 2023 Enphase has launched its latest highly anticipated IQ8 microinverter to disrupt the solar industry. Coupled with a recent year-over-year gain of 66%, there's no doubt that Enphase will rebound from its recent slump.
Speaking of slowdowns, the emphasis is on recent problems with sales and profit targets that have forced the company to sell at an extremely attractive price. ENPH currently has a PE ratio of 77%, compared to a five-year average of 99.71x to 23.41x, which is below the renewable energy sector average of 83.8x. Although sales do not look very promising yet, I am confident that ENPH's innovative product line will enable the company to regain its dominant market leadership in the coming years.
First Solar Light (FSLR)
Source: T. Schneider/Shutterstock.com
First Solar (NASDAQ: FSLR ) is a leading supplier of utility-scale solar panels and energy scales and continues to pioneer the next generation of solar technology. Yahoo Finance analysts expect the stock to trade in a range of $157.56 to $326 for the year, with an average range of $232.34.
Looking at First Solar's financials and valuation, the current year-over-year earnings growth rate is 25.28%, which is 400% higher than the five-year average of 5.06%. Although the company is not currently undervalued, its high profitability makes up for it. First Solar's gross profit margin was 27.17% TTM compared to a 5-year average of 18.92%, representing about 44% growth.
Meanwhile, President Joe Biden's 2018 solar plan to increase solar power from 3 percent in 2020 to 45 percent by 2050, combined with lower costs and supportive policies like tax incentives, will help only the growth of the solar industry.
From First Solar's entry into the most profitable solar module market to CadTel's innovative and profitable thin-film photovoltaic semiconductor, First Solar will be a great addition to any investor looking for new solar stocks.
Altus Power (AMPS)
Source: Shutterstock
Altus Power (NYSE: AMPS ) is a leading player in the energy sector, leading the solar transition by managing commercial and community solar assets.
Altus Power recently introduced the new Atlus IQ, an AI-driven cloud tool that provides insights into solar energy consumption and savings. From real-time monitoring and solutions to comprehensive reporting and seamless portfolio integration, Atlus IQ only accelerates the growth of Atlus Power.
Coming to Altus Power Financial, its year-over-year earnings growth is an excellent 53.93 percent, higher than the industry average of 6.89 percent. Although the company may be undervalued due to its recent growth spurt, its attractive margins still make it an attractive investment. With a TTM EBITDA margin of 52.97% and a gross margin of 82.35%, Atlus will have the liquidity to continue investing in R&D and capital expenditures. Considering the overall AI trends driving this low-cost energy company, I'm confident that Atlus will be the next unstoppable force in the solar industry.
At the time of publication, Jan Hartana and Vayun Chugh do not hold any position (directly or indirectly) in the securities mentioned in this article. The opinions expressed in this article are those of the author and adhere to InvestorPlace.com's publication guidelines.
Chandler Capital is the brainchild of Ian Hortana and Waryun Chug. Ian Hartana and Vayun Chugh are self-taught investors whose work has been featured in Seeking Alpha. Her research focuses primarily on GARP stocks with a long-term investment outlook covering a variety of sectors such as technology, energy and healthcare.
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